It was a building of imagination!

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The difficult economic situation that Lebanon is experiencing today, up to and including the almost daily raids on bank branches, is based on the continuous deterioration of public finances since 2001 (partly with the failure of the Paris Conferences 1, 2 and 3), and the deterioration in the exchange rate of the lira in US dollars from 1,500 to more than thirty thousand today. Of course, the factors of political instability, the bombing of the port and the Corona epidemic should not be underestimated. The consequences of the deterioration of the state finances and the deterioration of the currency were severe for the citizens, most of whom became victims of a harsh living situation. Lebanon lived years of false prosperity, which fell like a balloon in October 2019, when commercial banks immediately stumbled, followed by a drop in the national currency. With these rapid collapses, it became clear that the Lebanese political system was losing its cool, and that the people were victims of a meager “Ponzi” (Financial pyramid) system that was a fancy build.

The truth about the Ponzi pyramid
The idea of ​​the financial pyramid is not like the idea of ​​discovering gunpowder, or as they say in English, it is not rocket science. Rather, it is a naive idea invented by a poor Italian immigrant without any degree named Carlo Ponzi, who immigrated to America in 1903, then moved to Montreal, Canada, where he worked in a branch of an Italian bank He learned the work of the bank with his innate intelligence, but not as someone with a business administration degree. but rather as someone who works in a cobbler and has learned the shoe repair department. Ponzi then whispers to clients in Italian or in English with an Italian accent that his bank pays them 3 percent on their deposits, while he can personally guarantee them an interest/profit of 50 percent within two months. Some of the customers, most of whom are from the Italian community, believed him and started paying him their meager money. Over time, their number increased, especially the rich among them, who saw that those who preceded them and trusted Carlo Ponzi got an attractive rate of profit after 60 days, and some even asked Ponzi to keep their money in order to to employ him again. .

Of course, Ponzi would pay off the fictitious profit with money he received from new customers or from old customers who “strengthened” their money with him, in the manner of “stealing from Paul to pay Peter”, and for himself the thousands dollars hold. he spent on himself and his family and friends. However, the continuation of Carlo Ponzi’s pyramid was not guaranteed, as the percentage of money he had to pay after years exceeded what he received from clients. The amount he kept for himself was reduced to a very small amount. He declared bankruptcy and left Canada, returning to America in 19011, where he opened a “reliable” company, this time with the same pyramid scheme. However, his company was quickly exposed to the strict laws of the state of New York.

The reason for his quick exposure was that the large sums that clients deposited into his company amounted to $20 million, most of which were borrowed by his clients from legitimate banks in New York State to take advantage of the difference in interest. As the banks for various reasons demanded additional documents from their customers and the return of loans, the withdrawals were repeated and Carlo Ponzi could not pay, so the American police arrested him and he was sentenced to 25 years in prison and then deported out of the country to return to Italy in 1934.

After understanding the Ponzi pyramid, we realize that what happened in Lebanon from 1997 to 2019 under the title of “engineers” and promises of high benefits, accumulated public deposits from residents, expatriates and Arabs who had no genius do not have. In fact, the October 17, 2019 uprising exposed the Lebanese banking sector and those behind it, as a Great Ponzi bubble exploded and collapsed in unprecedented shocks. Tens of thousands of citizens have fallen victim to this deception, thinking that the law of unfairness is in effect and that their money is at their disposal. In this, another lesson from the Ponzi pyramid is the complicity of depositors with Ponzi in a game that has no scientific, economic or financial basis, and in this Baraqish got himself.

Lebanese banks are faltering
Carlo Ponzi has grandchildren who have multiplied in Lebanon, where they have reached high positions in the state and in the banking sector since at least 1995. Commercial banks numbered in the dozens. The environment was suitable for the birth of a huge Ponzi credit pyramid that attracted foreign and Lebanese money with a higher interest rate than all countries of the world. Banks have invested the bulk of customer deposits in Lebanese treasury bonds at higher interest than they pay for deposits, based on the assumption that any bank’s payments to customers remain far less than the incoming or frozen funds, in addition to excessive banking fees. Everything was fine, badges and prizes multiplied.

The reason for the catastrophic situation of the Lebanese finances and the Lebanese money that has become clear since the fall of 2019 is the disregard of the financial and monetary authorities in Lebanon to the consequences of the global financial crisis in 2008-2009. In addition to the well-known official corruption, the Central Bank of Lebanon’s way of working was superficial and had nothing to do with the professionalism of central banks in Western countries. Rather, claims were made that the miracle of what happened and that Lebanon – and here the farce – was exempt from the repercussions of the global financial crisis in 2008. In fact, the benefits The high falsely covered the nudity, followed by geometries, that the manipulation of interests and deposits between the Banque du Liban and the banks, which brought profit to the owners of the banks. The cancer patient would hide the disease in quantities of powders, make-up and artificial hair, while he had a short time left and died. The monetary policy in Lebanon followed by the Banque du Liban and the banking sector was just a comedy film from Adel Imam’s films about a fraud that was predetermined to collapse in the state of the financial pyramid, because this pyramid is any threatened moment when the flow of new capital became less than the amount of interest that it It had to be paid to the depositors, and the pyramid destroyed itself.

It was the duty of the owners of commercial banks to abide by the law and the tasks of the commercial bank to support the growth of a real economy in Lebanon and encourage investments in productive sectors such as agriculture and industry. But here is the disaster: They took advantage of the large deposits and turned to making quick profits to enrich themselves from the high interest on Lebanese government treasury bonds and the expansion of branches in Lebanon, Arab and European countries without planning or feasibility studies. So the owners of this sector have not ended up in a state of dire stumbling, but rather they have failed to play a real role in the economy boosting industry and agriculture, and they have a failed sector. became in a country unable to feed itself. and buy almost everything from abroad.

When the uprising broke out on October 17, 2019, the fragile situation of the Lebanese banking system was exposed, which granted public loans amounting to 40 billion dollars and bought treasury bonds of the Lebanese state that accounted for 70 percent of the total national debt amount, including 30 billion dollars in certificates of deposit with the Banque du Liban and 34 billion dollars in certificates of deposit with the Banque du Liban. Treasury Bills. Banks lost public confidence when huge withdrawals from BANK RUN took place and billions were hoarded in houses, kitchen cupboards and bedrooms inside Lebanon, and billions of other dollars were also left or smuggled abroad. With the decrease in the confidence of depositors and the general public, the flow of liquid capital decreased, so it was natural for the banks to close their doors Time when due to freezing or by agreement between the depositor and the bank, and not using random capital controls not approved by Parliament in a law, or an unfair HAIRCUT that steals part of the deposit and pays the value of dollar checks up to 20 percent of its value.

What the banking sector used to do is no longer profitable. Even deposits around the world no longer bring interest. The Lebanese banking sector is doomed to shrink into a small sector serving an economy whose annual output has fallen by 60 percent (from $55 billion to $18 billion), and it will not be surprising that the reform of this sector bankruptcy of a large number of banks.

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